California: Official Poverty Rate v True Poverty Rate

Researchers updated the federal tool for measuring poverty and found more Californians can't afford a basic standard of living.

More than 2.2 million people in California live in poverty but are not included in the official federal count of poverty estimates. That’s one of several findings in an October report by the Public Policy Institute of California, a nonpartisan think tank based in San Francisco. The institute’s researchers updated and modified the official federal poverty measure in an effort to better reflect the number of Californians in poverty.
The official measure, developed in the early 1960s, is widely considered outdated, in part because it assumes that the minimum level of income needed to get by would be three times the cost of food. That made sense in the 1960s, when food accounted for a third of a household budget, but now food is less than one-seventh of household costs.
“It’s better than nothing,” says Laura Speer, an associate director of policy advocacy reform for the Annie E. Casey Foundation. “But from the standpoint of wanting to have evidence-based policies, [alternative measurement] is pretty necessary. It’s important for government to see the impact of policy and how much need there really is.”

California isn’t the first state or local government to calculate an alternative poverty measure. New York City’s Center for Economic Opportunity published its own measure in 2008, as did researchers from the University of Wisconsin, Madison.
Today’s efforts to create alternative poverty measures originate with a 1995 report by the National Academy of Sciences. Even 18 years ago, poverty researchers within government agreed that the historical way of counting the poor was, in the report’s own words, “demonstrably flawed judged by today's knowledge; it needs to be replaced.” The report’s authors recommended that a new measure should include a broader range of income sources and a more nuanced picture of expenses. That meant calculating the value of public assistance benefits, such as food stamps and low-income home energy assistance; it also meant tallying the cost of child-support payments, out-of-pocket medical expenses and transportation. Unlike the official measure, the alternative would adjust for geographical differences in the cost of housing. The new California poverty measure is a descendant of those recommendations.

In 2011, California’s official poverty rate was 16.2 percent. But the state’s true poverty rate was about 22 percent, according to the Public Policy Institute. There were other differences. The official poverty rate among adults 65 and older was 9.6 percent, but almost twice as high -- 18.9 percent -- under the alternative measure. The group’s analysis also took into account the combined effect of safety net programs -- such as food stamps, the Earned Income Tax Credit and family cash assistance -- and found that the state’s overall poverty rate would be even higher, about 30 percent, in the absence of those public supports.

from here plus interview with the report's lead author Sarah Bohn

The real solution to poverty - world socialism - has still to be understood by the world's majority. The same system (and its controllers) that causes poverty and homelessness - capitalism - also deliberately broadcasts misinformation about this alternative system in order to stay in control, retain the divisive class system and keep the profits flowing in the right direction - theirs. 
JS